Shortly after the defeat of Turkey by the Balkan allies, a conference of ambassadors of the Great Powers (Britain, Germany, Russia, Austria-Hungary, France, and Italy) convened in London in December 1912 to settle the outstanding issues raised by the conflict. With support given to the Albanians by Austria-Hungary and Italy, the conference agreed to create an independent state of Albania. But, in drawing the borders of the new state, owing to strong pressure from Albania's neighbours, the Great Powers largely ignored demographic realities and ceded the vast region of Kosova to Serbia, while, in the south, Greece was given the greater part of ,ameria, a part of the old region of Epirus centred on the Thamis River. Many observers doubted whether the new state would be viable with about one-half of Albanian lands and population left outside its borders, especially since these lands were the most productive in food grains and livestock. On the other hand, a small community of about 35,000 ethnic Greeks was included within Albania's borders. (However, Greece, which counted all Albanians of the Orthodox faith--20 percent of the population--as Greeks, claimed that the number of ethnic Greeks was considerably larger.) Thereafter, Kosova and the ,ameria remained troublesome issues in Albanian-Greek and Albanian-Yugoslav relations. The Great Powers also appointed a German prince, Wilhelm zu Wied, as ruler of Albania. Wilhelm arrived in Albania in March 1914, but his unfamiliarity with Albania and its problems, compounded by complications arising from the outbreak of World War I, led him to depart from Albania six months later. The war plunged the country into a new crisis, as the armies of Austria-Hungary, France, Italy, Greece, Montenegro, and Serbia invaded and occupied it. Left without any political leadership or authority, the country was in chaos, and its very fate hung in the balance. At the Paris Peace Conference after the war, the extinction of Albania was averted largely through the efforts of U.S. President Woodrow Wilson, who vetoed a plan by Britain, France, and Italy to partition Albania among its neighbours. A national congress, held in Lushnje in January 1920, laid the foundations of a new government. In December of that year Albania, this time with the help of Britain, gained admission to the League of Nations, thereby winning for the first time international recognition as a sovereign nation and state.

At the start of the 1920s, Albanian society was divided by two apparently irreconcilable forces. One, made up mainly of deeply conservative landowning beys and tribal bajraktars who were tied to the Ottoman and feudal past, was led by Ahmed Bey Zogu, a chieftain from the Mat region of north-central Albania. The other, made up of liberal intellectuals, democratic politicians, and progressive merchants who looked to the West and wanted to modernize and Westernize Albania, was led by Fan S. Noli, an American-educated bishop of the Orthodox church. In the event, this East-West polarization of Albanian society was of such magnitude and complexity that neither leader could master and overcome it. In the unusually open and free political, social, and cultural climate that prevailed in Albania between 1920 and 1924, the liberal forces gathered strength, and, by mid-1924, a popular revolt forced Zogu to flee to Yugoslavia. Installed as prime minister of the new government in June 1924, Noli set out to build a Western-style democracy in Albania, and toward that end he announced a radical program of land reform and modernization. But his vacillation in carrying out the program, coupled with a depleted state treasury and a failure to obtain international recognition for his revolutionary, left-of-centre government, quickly alienated most of Noli's supporters, and six months later he was overthrown by an armed assault led by Zogu and aided by Yugoslavia. Zogu began his 14-year reign in Albania--first as president (1925-28), then as King Zog I (1928-39)--in a country rife with political and social instability. Greatly in need of foreign aid and credit in order to stabilize the country, Zog signed a number of accords with Italy. These provided transitory financial relief to Albania, but they effected no basic change in its economy, especially under the conditions of the Great Depression of the 1930s. Italy, on the other hand, viewed Albania primarily as a bridgehead for military expansion into the Balkans. On April 7, 1939, Italy invaded and shortly after occupied the country. King Zog fled to Greece. The social base of Zog's power was a coalition of southern beys and northern bajraktars. With the support of this coalition--plus a vast Oriental bureaucracy, an efficient police force, and Italian money--King Zog brought a large measure of stability to Albania. He extended the authority of the government to the highlands, reduced the brigandage that had formerly plagued the country, laid the foundations of a modern educational system, and took a few steps to Westernize Albanian social life. On balance, however, his achievements were outweighed by his failures. Although formally a constitutional monarch, in reality Zog was a dictator, and Albania under him experienced the fragile stability of a dictatorship. Zog failed to resolve Albania's fundamental problem, that of land reform, leaving the peasantry as impoverished as before. In order to stave off famine, the government had to import food grains annually, but, even so, thousands of people migrated abroad in search of a better life. Moreover, Zog denied democratic freedoms to Albanians and created conditions that spawned periodic revolts against his regime, alienated most of the educated class, fomented labour unrest, and led to the formation of the first communist groups in the country.